Friday, September 22, 2017

Tesco awaits a long overdue positive quarter

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The UK’s biggest grocer Tesco is expected to announce its first positive quarter in over three years early next week.

The big four retailer has undergone huge obstacles in recent years, partly spurred by the rise of discounter Aldi and Lidl, changing shopping habits and its own severely damaging accounting scandal.

CEO Dave Lewis has focused on lowering prices, strengthening relationships with suppliers and offering better customer service in order to recover the business. Lewis also sold Tesco’s South Korean business, cut product ranges and costs and, most significantly, slashed thousands of jobs in order to lower the company’s debts.

Following its best Christmas trading period in four years, analysts at Barclays forecast a 0.8% increase in fourth quarter like-for-likes.

“While this is very welcome, the discounters continue to open stores and take market share, Asda seems to be sharpening its offer, and there will likely be cost pressure,” analysts said while taking into account to the recent amendments to the national living wage.

An overall trading profit of £932m has been forecast, yet the figure is drastically lower than Tesco’s £3.97bn revenue in 2011-12.

Tesco will announce its latest results on 13 April. Analysts predict profit growth in the 2016-17 year.

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